FCC Steps Toward Auction to Free Airwaves for Smartphones

Sept. 28 (Bloomberg) -- The Federal Communications
Commission today moved toward selling television airwaves for
use by smartphones, a step intended to raise $15 billion and
help meet soaring demand for wireless computing.

The agency on a 5-0 vote approved a document that asks
about the best ways to conduct auctions of frequencies that
would be voluntarily surrendered by TV stations, and sold in
turn to mobile providers led by Verizon Wireless.

“This is a big deal,” FCC Chairman Julius Genachowski, a
Democrat, said. The auctions, expected to take place in 2014,
will free airwaves, raise “very substantial revenue” and help
provide funds for a nationwide radio network for emergency
workers such as police and firefighters, he said.

The auctions could fetch $15.2 billion for the U.S.
Treasury, according to an estimate by the Congressional Budget
Office, with part of the money dedicated to the emergency-responder network. Congress called for the auctions in
legislation that passed in February.

President Barack Obama’s administration has made freeing
more airwaves a priority, saying U.S. competitiveness depends in
part on fast and widespread mobile-Internet service.

The FCC plans to buy airwaves that some TV stations will
voluntarily relinquish in a process known as a reverse auction.
It would sell the frequencies in a traditional auction. Through
today’s action the FCC is seeking public comment before it
settles next year on rules for the sales.

Freeing Airwaves

TV-station owners will have to decide whether to keep their
airwaves and stay in business, sell part of their allotments, or
sell all their airwaves and take a one-time payment to cease
broadcasting.

As stations make their choices, the FCC will need to
reassign some to new frequencies to assemble blocks of clear
airwaves that would be attractive to mobile providers.

The FCC hasn’t estimated how many stations may participate,
and the choice is up to the TV industry, said Gary Epstein, head
of the agency’s auction task force.

Broadcasters want to make sure stations that don’t
participate aren’t penalized by, for example, suffering
interference or being moved to frequencies that don’t carry
signals as far, Gordon Smith, president of the National
Association of Broadcasters, said at a news conference. Members
of the Washington-based trade group include News Corp.’s Fox,
CBS Corp., Comcast Corp.’s NBC and the Walt Disney Co.’s ABC.

‘Uncharted Territory’

“We’re certainly entering uncharted territory,” Smith
said. “There’s never been an auction of this type.”

Procuring airwaves has become a priority for Verizon
Wireless, which in August won regulatory approval to buy
frequencies from cable companies, and for second-largest
provider AT&T, which was rebuffed by U.S. officials last year
when it tried to buy No. 4 U.S. provider T-Mobile USA Inc.

The agency today also voted to consider altering the way it
judges whether prospective airwaves purchases by wireless
providers raise anti-competitive concerns. The agency hasn’t
offered a specific proposal to either tighten or loosen its
discretion, Ruth Milkman, chief of the agency’s wireless bureau,
said at a news conference.

Changes would affect Verizon, AT&T and smaller wireless
carriers as they buy frequencies. The companies need FCC
approval as they seek to acquire airwaves to meet smartphone
demand.

The FCC’s test generally limits buyers to amassing no more
than one-third of airwaves in any geographic market. Purchases
that would carry a company’s holdings beyond that threshold
invite extra scrutiny from the agency, which may require
companies to sell airwaves so frequencies remain available for
competitors.